I was looking forward to reading this as soon as I heard it was on the way last summer. I’ll break it to you right off the bat. ‘The Price of Everything: A Parable of Possibility and Prosperity is not Twilight. There are no dreamy romantic vampires. Here’s a 6 minute YouTube interview w/ Dr. Roberts as he explains the book. (recommended)
Now that that’s behind us … ‘The Price of Everything‘ is clearly intended to teach the reader something about economics, the importance and role of prices in particular. The role of prices is greatly under-appreciated by the general public (politicians in particular), imho, and myself up until recent years. The story is centered around Cuban-American Stanford Student and tennis star, Ramon Fernandez.
The book begins with an earthquake that knocks out all power in the area. There is a local run on flashlights, batteries, generators, candles, etc., all the usual things. Ramon Fernandez and his girlfriend Amy go from store to store in a search for the above supplies. [Dr. Roberts blogs at Cafe Hayek.]
Each store is out of all them, bare shelves. But there is one store that fortunately has these things available: the dreaded Big Box (a placeholder for any large vilified chain like Wal-Mart). They had some supplies available because they raised their prices to match demand. Ramon was able to buy what he needed here but was angry that the ‘greedy’ Big Box store had raised its prices and ‘exploited’ consumers. He failed to see the role of prices and that freely-moving prices allowed him to purchase what he wanted. The rest of the book is largely a conversation between Ramon and his mentor/economics teacher Ruth Lieber. Prof. Lieber gently and kindly teaches the importance and role of prices in an economy. She doesn’t beat him over the head with it but rather leads him down his own path to discover these truths.
A few thoughts on the book:
1. It was great to see Leonard Read’s ‘I, Pencil’ referenced.
2. Also mentioned: Hayek and Adam Smith.
3. p. 36, spontaneous order, the ‘particular circumstance of time and place.’
4. Dispersed knowledge as opposed to a czar.
5. pp. 69-73, a good discussion of ‘justice’ as it applies to prices.
6. Re: Cuba, how can there be political prisoners in a Workers’ Paradise?
7. pp. 79-82, a good discussion of inflation, price indices, and quality of life
8. The point that as a whole we are all better off, at least in most countries. The poor have things unavailable to the very rich at any price. just 30 years ago.
9. p. 85, a discussion the gap between rich and poor.
10. p. 124, ‘Economics is not about prices and money. Economics is about how to get the most out of life.’ This reminds of me of my favorite definition of economics (paraphrased, from Dr. Thomas Sowell ) “… the study of scarce resources that have alternative uses.”
11. All of chapter 10 is phenomenal.
12. P. 136, the paragraph beginning, “Markets aren’t perfect – the incentives …” is a must-read.
If this is a topic that even mildly interests you, get the book. I would strongly recommend it for junior-high students and teenagers that have no interest in reading an economics text (can you really blame them?). [chapter 1 and chapter 2 are available for free]
The Price of Everything: A Parable of Possibility and Prosperity at Amazon
Roberts on the Price of Everything – EconTalk
YouTube – Russell Roberts – The Price of Everything
Pricenton Press: The Price of Everything: A Parable of Possibility and Prosperity (includes a full text search of the book)
Quick Book Review: The Choice by Russell Roberts
Quick Book Review: The Invisible Heart
Amazon.com: The Price of Everything: A Parable of Possibility and Prosperity
Dr. Mike Munger on Price Gouging EconTalk podcast
A few more reviews:
Selected E-Mails: Russell Roberts: The Book Bench
George Will: Pencils and Politics – Newsweek
The Price of Everything – Freakonomics Blog
The Price of Everything: A Parable of Possibility and Prosperity a review